To furnish or not to furnish? That is the question.
In order to try to reduce the outlay from my pay to purchase more properties, I need to come up with ways of maximising the rents received.
One of the ways I do this is by purchasing properties close to the beach or major shopping centres/schools so there is always a high demand and annual rent increases are generally accepted.
For the properties close to the beach, in my case strata units, I decided to furnish two of them and target corporate clients as opposed to short term accommodation. I did this as the cost in time and effort in cleaning after a short term stay when working fulltime and the costs involved in hiring a cleaner were not an avenue I wanted to go down.
In deciding on this strategy I had to accept that there would be periods of time when the unit would be vacant and had to weigh up the risks of that against receiving less rent for a normal unfurnished lease situation. I decided to try it out and buy good second hand where possible to complete the fitout. This often meant better quality items as I was able to get something that was practically new and if I needed to bring the items home in a hurry to rent out the unit unfurnished I’d be able to.
I went around local swap meets and second hand shops looking for items which would create a homely atmosphere. I bought mostly pictures, ornaments, rugs, cushions etc which still looked new. I had a lounge suite and dining table in my own home so utilised these. I was prepared to bring the furnishings home if the unit was vacant for more than two mortgage payments as I couldn’t carry the cost more than that time period.
I purchased fridge, microwave, washer, dryer, crockery, linen new.
All units required renovating and this one was no different. I had floating floors fitted, did a mini reno by putting in a new hob and wall oven and fitted cupboard handles and new taps in the kitchen. I also put new tiles about the bench top and a feature pewter border strip. The difference was noticeable and the s/s fridge really increased the appeal.
I fitted new taps/shower hose in the bathroom and removed feature tiles and replaced with hidden plain tiles behind the vanity, which was great as I didn’t have to find old tiles to replace those taken.
I got a handyman in to tile the laundry and toilet floor and I removed the large laundry trough and replaced with a half size one which meant I could install a one door laundry cupboard for cleaning equipment. All up I spent around $20,000 on renovations and furnishings which I planned for and received with my mortgage when I bought the property (asking price same as others in the area was $349k, I bought for $310k so the reno budget was acceptable). I had a depreciation schedule completed and those items which could be claimed were. You need to weigh up the cost versus how long it will take to pay back to see if it’s worth it in your situation.
In the four years since I bought the unit I have been lucky enough to have about 10 weeks vacancy in the whole time. I gain $200 per week in rent from having furnished versus unfurnished and pay for the utilities out of this also at a cost of around $150 per 6 weeks (electricity).
What I learned from this process is to try and maximise the usage wherever possible.
The second unit I purchased this year, four years later than the first with asking price over $350k, purchased for $320k. Furnished straight away, it was a quick turnaround with minimal changes apart from shower/tapware, new bathroom mirror and new light fittings. The kitchen had been renovated in the last 5 years so no work was needed.
As I enjoy bargain hunting I was already underway with purchases from swap meets such as cushions, pictures, ornaments, little tables and rugs.
The bigger task in this reno was the outdoor area, which required removal of a tree and a complete garden/plant makeover. I purchased plants from swap meet and with the help of my retired mum (who is now known affectionately as my personal assistant) we set about creating a relaxing area to sit.
Again I used furniture from home, namely my spare bedroom setting and the lounge suite I replaced 4 years ago when I took it to my first unit.
I had a tenant lined up who was in state on contract work and so it was an easy transition into a lease. The tenant left last week so I have put the property with a Property manager to manage on my behalf and advertised on a website for families immigrating to Australia and need to wait 3 months for their furniture to arrive. Rockingham has a large percentage of English (my fellow countrymen) so this option is a viable one for the area.
I’m not sure the stress of this is for everyone as I’m in the position of having two furnished units available at the moment with an 8 week booking over June/July for one. Who knows, by my next blog I may have cleared one out and rented out normally! watch this space!
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Single mum Lisa Curtin has conquered most investors’ biggest fears, going from struggling to pay her mortgages to seeing success in renovations and now claiming the ultimate prize: a portfolio that will enable her to retire at 50.